Smurphy Vislock, the world's largest paper and corrugated packaging giant, released its financial report for the second quarter and the first half of 2025 on July 30. Despite a net loss in the second quarter, the company still achieved steady growth from the overall data of the first half of the year. The North American market emerged as the biggest highlight of this quarter's performance, while Europe, the Middle East and Africa, as well as the Asia-Pacific region, also demonstrated strong performances.
There was a net loss in the second quarter, but revenue and operating profit increased. Among them, net sales reached 7.94 billion US dollars (approximately 57 billion yuan), far exceeding 2.969 billion US dollars in the same period last year. Operating profit was 251 million US dollars, a slight increase from 244 million US dollars in the same period last year. The net loss was 26 million US dollars (approximately 187 million yuan), in sharp contrast to the 132 million US dollars profit in the same period last year.
It is worth noting that the main reason for the net loss in the second quarter was the factory closures and other restructuring measures previously announced by the company, with the total related costs reaching as high as 280 million US dollars. Excluding the impact of these one-off costs, the company's adjusted EBITDA reached 1.213 billion US dollars, with an adjusted EBITDA margin of 15.3%, demonstrating strong operational resilience.
The overall performance in the first half of the year was positive, but the profit margin needs to be improved. Net sales reached 15.596 billion US dollars, approximately 112 billion yuan (for comparison, the combined revenue of the top 20 in the newly released top 100 printing managers was about 83.6 billion yuan), representing a significant increase from 5.899 billion US dollars in the same period last year.
Operating profit was 804 million US dollars, far higher than 551 million US dollars in the same period last year. Net profit was 356 million US dollars (approximately 2.556 billion yuan), an increase from 323 million US dollars in the same period last year. However, the net profit margin in the first half of the year was only 2.28%, indicating that while the company is expanding its revenue scale, it still needs to continue to focus on improving its profit margin in the future.
Tony Smurmurphy, President and CEO of Smurfi-Visilock, affirmed the company's second-quarter performance and particularly emphasized the significant improvement in North American business and the continued outstanding performance of Latin American business.
North America: Net sales reached 4.652 billion US dollars. The adjusted EBITDA for this quarter reached 752 million US dollars, and the adjusted EBITDA margin was 15.8%. This is mainly attributed to the company's more precise operational focus and the effective implementation of the synergy plan. Smurmurphy expressed confidence in the continuous improvement of the business in North America in the future.
Europe, the Middle East and Africa, and the Asia-Pacific region: Net sales were 2.778 billion US dollars. The adjusted EBITDA for this quarter reached 372 million US dollars, and the adjusted EBITDA margin was 13.4%. Despite the challenges in the European market, the company has still achieved performance that exceeds the industry average, thanks to its customer-centric business philosophy and leading position in innovation and sustainable development.
Latin America: Net sales amounted to 515 million US dollars. The adjusted EBITDA for this quarter reached 123 million US dollars, with an adjusted EBITDA margin as high as 23.7%. The strong market position and performance improvement in this region continue to bring profits to the company. Smurmurphy believes that Latin America remains a region with huge endogenous and exogenous growth opportunities.
Tony SmurMurphy is optimistic about the company's performance and future prospects. He pointed out that with the company's strong geographical coverage, unparalleled product portfolio and core talent advantages, Smurphy-Visselock sees broad opportunities in all regions. Smurmurphy said on Wednesday's second-quarter earnings call that the company has made significant progress in a short period of time, especially with its North American business performing outstandingly. The company has invested 1 billion US dollars in its system, mainly for paper and processing assets. Chief Financial Officer Ken Powers said the company is expected to achieve an operational synergy of $400 million for the full year and has identified an additional $400 million in growth opportunities due to "clearer operational and business priorities".
Smurfit said that Smurfit Vislock will continue to optimize its system by eliminating non-strategic or inefficient assets and reaffirmed the plan announced in May to cut 600,000 tons of production capacity. Despite the current low demand trend, the company expects not to suspend production except for regular maintenance in the second half of 2025. The company has cut the "losses" of its North American corrugated box factory by approximately 40%, which includes both underperforming company assets and loss-making customer contracts. He emphasized that although a few factories "could not be saved for various reasons", the vast majority of them have the potential for improvement.
When discussing the continuous improvement of the carton system, Smurmurphy said that the company is screening and cutting loss-making customer contracts. He admitted that "we can't get rid of all the unsatisfactory contracts", but in terms of replacing "bad contracts" with quality ones, he saw great enthusiasm from the sales team. Smurmurphy disclosed that some factories that have cleared "bad contracts" have started to make profits and pointed out that such contracts will be "all cancelled by the same period next year".
Executives generally believe that although the tariffs that have been implemented so far have not yet had a significant impact on the import and export volume of paper in North America, future profit margins may be affected. Bowles referred to the 15% tariff rate announced in the trade deal reached between the United States and the European Union earlier this week, and pointed out that this is only slightly higher than the 10% tariff that has been imposed on US paper imports since spring. Bowles said that consumers have already been affected by the chain reaction of tariffs and pointed out that "historically, consumers typically bear about 70% of the tariff increase."
Powers believes that the real impact on the company's system will come from changes in consumer demand. He pointed out that the decline in consumer demand in the second quarter might be partly related to tariffs and economic uncertainties. He predicted that as the tariff situation became clearer, consumer confidence in some lagging regions might recover. The company is waiting for a typical increase in seasonal demand in the US summer, but the demand in July did not materiate as expected. Smurmurphy said, "If the tariff situation is eventually resolved, we hope that demand will pick up in August and September."
Executives at Smurphy-Vislock remain optimistic about the improvement of the corrugated paper business in the second half of 2025 and next year. They expect that customer promotion activities will increase in the second half of the year and sales will remain stable. Smurmurphy said, "We don't expect the situation to deteriorate, but we don't expect it to improve substantially either." The company expects its adjusted EBITDA for the third quarter to reach 1.3 billion US dollars and maintains its previous full-year EBITDA forecast of 5 billion to 5.2 billion US dollars.
